Archive

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EarthBlog News is an outreach of the HCM Daily Newsletter which was first published beginning in 1995. Below are some examples of commentary throughout the HCM Daily Newsletter and it’s transition to EarthBlog News. A Blogs commentary has to stand the test of time. EarthBlog News is today the private daily trading diary of a private citizen. A citizen who makes simple observations and future speculations on the world and invests his own money accordingly. It is a daily fact gathering and processing saga in an effort to figure out what the truth is, before everyone else does. So far, we are doing ok. EarthBlog includes a wide variety of alternative news links in every issue. Below are some excerpts from past issues.

On Platinum below $400/oz in May 1997“platinum is cheap anywhere under 400.” – 05/15/1997

On a building stock market Mania in May 1997“The stock market continued it’s one way path up on Thursday. regarding my mania talk the other day, I’ve read a lot about manias because it’s very interesting to me. The common threads seem to be that they all go for much longer than anyone expects, none of them have widely predicted endings, they all do end, and when they end usually the price is lower than when the mania started. ” – 05/15/1997

On Stock Market Overvaluation, March 16, 1998I haven’t commented much on the stock market lately…I guess the main reason is because it almost seems silly to talk about valuation in a market like this. Even Warren Buffet came out Monday and said he didn’t feel the market was overvalued. At over 6 times book value for the broad market vs an average of 1.5, Ben Graham is rolling over in his grave I’m sure, when one of his disciples talks like that. I completely understand what’s going on here…it’s a mania like most of us have never witnessed and valuation has nothing to do with the equation. Having said that however, it’s difficult or impossible to determine when a mania will end. I’ve gotten past thinking that it will end due to extreme valuation. With a mania like this….throw all that out the window. – 3/16/1998

On the potential for future terrorism in the US, December 1998we could be facing a new sort of war…..terrorism on a nuclear scale. I believe that unfortunately, ultimately this is probably going to become a reality. The more governments and people that oppose what they are seeing in terms of US behavior, the higher the probability of this sort of thing in my opinion. A nuclear device going off would almost surely cause a serious problem in the financial markets, or what’s left of them seeing that one of the most likely terrorist targets in the US would be the south end of Manhattan.” – 12/20/1998

On the coming commodities boom, October 24, 2000“First of all, I definitely agree that the strength of the USD is hurting commodity prices here in the US. I also agree that in many ways, being long gold is a proxy for being short the US dollar. Thirdly, I agree that the USD is priced like a dot com company a few months ago. My thinking is that as the US stock market bubble pops, foreign capital outflows will pressure the US dollar, and probably pressure all paper assets vis a vis “real things“. – 10/24 2000

Long gold below $300 an ounce in 2001I am long gold already. 11/30/2001

Injecting some sanity into the discussion – January 2002I discussed AOL in my 2002 outlook as an example of overvaluation. Since I wrote that, AOL has announced the largest one time charge ever….in the neighborhood of 40-60 Billion and stated that 2002 will herald little improvement in operating conditions….did the stock get hit on that news? no… Am I the only financial market participant in the world that sees that as a red flag?? This company has a market cap of 136 Billion. Shareholders just lost over 40% of their wealth on a cap weighted basis…. Is it worth it’s current 76 times earnings? Is it worth 15 times earnings? That’s the question I’d ask. This kind of valuation is lunacy (if I knew a stronger word than lunacy I’d use it). I mean, with all things considered including the financial engineering, how much more overvalued can a company like this get??? This is extreme bubble valuation folks and you have to ask how many greater fools are out there to push it higher. Meanwhile, I’ll keep AOL on my Enron watch. This is not at all unlike the dot com bubble where the real question is not “is this company worth this much” but rather, how much higher can it be pushed before it pops….I mean, in this engineered environment, 70, 80, 90 times earnings…what’s the difference… they’re just meaningless numbers, right? How about short AOL and long copper on a spread trade!” – 01/08/2002

On War with Iraq, November 2002, 4 months before the war beganThere will be a war with IRAQ, and I’m fairly confident that it will happen by March of 2003. After IRAQ, then comes Iran, Syria and Saudi Arabia probably in that order. – 11/14/2002

Long Copper around 70 cents a pound in January 2003“At this point I’m out of the scale trade and I’m just long copper” – 01/06/2003

Predictions about the war in Iraq, one month after the invasion, April 2003“it isn’t that the plan was wrong, it’s that the assumptions were wrong. It was the right plan for wrong the set of assumptions, and wrong in a spectacular way…..In other words, the coalition has now, or will soon inherit millions (some hostile) IRAQI men women and children, with no government…..This is sort of a microcosm of what (former Attorney General) Ramsey Clark was talking about when he said “GWB is leading the US and all nations towards a lawless world of endless wars”. IRAQ is going to look like the wild wild west…for years, while they take pot shots at guys wearing shell oil hats and blow themselves up at checkpoints and the guy with the biggest gun wins.” – 04/03/2003

On Iraq, August 2003It’s pretty simple…the prize is IRAQ’s geographic position and it’s wealth, and it’s going to be owned by American interests. GWB and Cheney are going to see to that. There’s a lot of money to be made there and a lot of deals have already been made…checks have been cut and hands have been shook(GWB). The population…well that’s just an annoyance that will be dealt with as necessary by “the axis of all things good and proper”. So..net net… 1.) The Americans aren’t leaving 2.) the situation is becoming more…not less…unstable.” – 8/12/2003

On Halliburton August 2003“Did you buy those Halliburton shares I was discussing before the war?” – 8/28/2003

Still Long gold and short the US dollar, November 2003I’ve been long gold now for around 2 years and short the DX for nearly a year and a half…how time flies. I have no particular time frame for when to take them off” – 11/24/2003

On the upcoming Real Estate Bust in March 2005 when no recognized it as a bubbleIf we do have a (real estate) “bust” in 2005, what will it look like? Are we going to see that deflationary collapse everyone is so worried about, or are we going to see more stagflation?” -03/04/2004

The Economy and the real estate bubble, March 2004If either the share market or the real estate bubble pops, the illusion of economic strength is going to pop also, and that will have a substantial hit to consumer confidence. So I’m starting to think that all of my talk about the financial engineers painting themselves into a corner is coming home to roost soon. My prognosis for the economy going into 2005 from here is not good. I see more stagflation and it looks like the whole illusion is in the early stages of crumbling….with the share market priced for perfection and then some.” – 03/16/2004

On the upcoming Erosion of the middle class, January 2005“So, if you can take home anything related to the financial markets from the above tirade, it is the disappearance of the middle class. It’s going, going gone. This is going to be one of the most dominant themes of the next decade….When I speak about the erosion of the middle class, I’m not saying that all middle and upper middle class jobs are going away. What I’m saying is that underreported inflation in the “Constant Price Index” (CPI) is going to (and already is) seriously eroding the standard of living for the mainstream. Already here in south Florida, with 3 bedroom homes now going for $600,000 due to an 80% or so increase in real estate prices in the past 7 years (conveniently not included in the party’s CPI), the average educated professional joe coming out of college simply cannot afford to buy a home, unless he finances so creatively that he might as well shackle a FED ball and chain to his ankle for life.” – 01/06/2005

Going long crude oil at $60 a barrel in September 2006So the war premium is coming out of crude oil and gold/silver, but it is far from clear the crisis has past or that the neocons have fundamentally changed their approach to “reshaping the mideast”. There were several high profile pundits today including Steven Roach who were proclaiming the commodity bull market is over. My take on that is that this is a narrow minded (compartmentalized) view that basically says, the economy is slowing down, and therefore the commodities boom is over. So…since I am mostly on the sidelines I’m hoping that I can have some trades come to me so to speak. In particular, if they can get all the war premium out of crude oil and the market remains in backwardation for the 07, 08, even 09 contracts, I’m planning to look at a long term, long crude oil futures position.” 09/11/2006

On Global inflation, April 2008With crude back around $110, I’m happy the markets are seeing things my way, but I can’t say I’m happy about what my way is. We are seeing global hyperinflation. It’s already ugly and getting worse. – 04/10/2008